Volume 1 - Iraq Watch

with an *) shows the total proceeds received by Iraqfor the sale of crude oil outside of the UN MOUand not just for the surcharge amounts.Figure 30 is a graphic representation of the data in thechart above. It illustrates how the surcharge revenueswere distributed among the associated SOMO bankaccounts.Figure 31 lists the Iraqi bank accounts, which wereestablished to receive cash payments from illegalborder sales of crude oil.• Sources at SOMO explained that the account at theJordan bank was set up for Euros and was closedafter just one month. The balance of this accountwas shifted over to the Ahli Bank accounts.Statements by ‘Isam Rashid al-Huwaysh,Former Director of the CBICustodial debriefings revealed that:• The CBI funded government departments throughpayments to the Ministry of Finance. The PresidentialDiwan was the only department that receivedmoney directly from the CBI.• The CBI distributed cash only on the instructionof the Minister of Finance to the Rafidian andRashid Banks. The Diwan transferred money totheir accounts. On instruction from the Minister ofFinance, Treasury Bonds were issued to cover cashtaken from the CBI.Regime Financeand Procurement• The Rafidian “Filfel”/Iraq account representsa SOMO account at the Rafidian Bank branchoffice located in Mosul which collected surchargeamounts from the border sales of oil to the areas tothe north. The SOMO office in Basra handled theareas to the south.Figure 32 depicts the allocation of the cash sales revenuein the various banks.Banking and the Transfer of Financial Assets forProcurementIraq manipulated its national banking structure tofinance the illicit procurement of dual-use goodsand WMD-related goods, as well as other militarygoods and services prohibited by the UN. Throughits national banking system, Iraq established internationalaccounts to finance its illegal procurementnetwork. Iraq’s international accounts, mainly locatedin Jordan, Lebanon and Syria, were instrumental inIraq’s ability to successfully transfer billions of dollarsof its illicitly earned oil revenues from its variousglobal accounts to international suppliers, front companies,domestic government and business entities,and foreign governments (see Annex G: Iraq’s BankingSystem for more details on the origins of the Iraqibanking system).CBIThe CBI was responsible for issuing and storing currencyof the government, protecting against counterfeitcurrency and disbursing funds based on directivesfrom the Minister of Finance. Individuals and companiesdoing business with the government of Iraqwould have to go through the CBI, which handled allofficial government transactions and funds. The CBIis composed of three domestic branches, includingits headquarters in Baghdad as well as one office inBasra and one office in Mosul. The Governor of theCBI before OIF was Isam Rashid al-Huwaysh.According to a senior Iraqi financial official, theCBI established overseas accounts in 24 Lebanesebanks, seven Jordanian banks, and one Belarusianbank to deposit cash from the ten percent systemof kickbacks from foreign suppliers of goods andfoodstuffs. CBI did not maintain overseas accountsin other countries because senior bank officers fearedthat such accounts would be frozen by the UnitedStates. The financial official said that other Iraqi governmentministries also maintained overseas accountsof funds provided from the CBI overseas accounts.CBI did not maintain any overseas holdings in realestate, stocks, bonds, or diamonds.CBI’s Role in Licensing Money ExchangersPrior to OIF, the Exchange Department of the CBIwas responsible for licensing the approximately 250licensed money exchangers in the business of convertingcurrency of one country into the currency ofanother country. Money exchangers were required toobtain a license from the MoT, and present it to theCBI in order to register as a money exchanger. Somemoney exchangers mark their currency for identificationpurposes and to assist in the prevention ofcounterfeiting.45